Who is the cost cutter in chief at Chevron? It's seems Executive Management's only strategy is cost cutting and layoffs for the rank and file. Is it truly MW pushing all this or others trying to impress him since he loves a good cut? Anyone know what's going on as Chevron is a weird place now days?
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Good luck getting a 15% cost cut via layoffs when total pre-tax expenditures are $167 bln and G&A costs are only $4.3 bln. G&A (i.e. wages, bonuses, benefits, etc) are a rounding error in the grand scheme of things.
"It’s the exec teams role to constantly assess and reduce cost"... nonsense! Job one is to develop opportunities to make money. Reducing cost and returning accumulated value to shareholders is what Sr. Management does when they have no idea how to do job one. A short-term loser strategy: Larry the liquidator. They are just trying to get their cash out.
MW only has two strategies: slashing costs and buying overpriced companies. That is all. Rinse and repeat.
Funny country we live in. Investors fall all over themselves handing money to startups with no discipline and virtually no chance of success, while insisting that stable, cash-generating companies constantly evaluate their spending, and preferably cut spending to increase dividends.
There was a time pre-MW when Chevron (via Chevron Way) talked about being the best we could be, most respected, being innovators and risk takers, putting emphasis on career development, and from all these came being a premier O&G company. That all changed, now all we're interested in is trendy social engineering, diversity for the sake of reportable demographics, success and advancement only for the favored few, and keep an eye on constant cost-cutting no matter what the business environment looks like. Chevron is no longer the revered and respected company it was 15 years ago, we have succumbed to being a middle-of-the-pack company. Only our (now dwindling) size keeps us in the news.
Look at MWs history and you’ll have your answer.
In our business, cutting cost is the easiest way for any manager to improve the bottom line and look like a star. Increasing production takes years if not decades. Arresting decline is very tough. Layoffs can cut costs 15% in a few months. Any long term downside to cutting won’t be felt in the top line for many years.
Oil and has companies are not the same as tech companies, there is no product for the consumer other than oil and gas, the objective is to drill and extract at lowest cost, sell at highest profit, for the tech industry it is always a new product, a new app, gadget, so they can and should spend on the people where as in oil and gas, it is all about optimizing costs. Any investment in people is only towards lowering extraction cost not innovating any new product, so it would be very specific and not sustainable for a long run. The big cost co trotter is G&A [i.e. people] it has and will be always the key tool to adjust organization expenses.
It’s the exec teams role to constantly assess and reduce cost. That’s a large part of what they are employed by the shareholders to do.